Cost could be the biggest hurdle to APAC’s clean hydrogen future

Image: Siemens

The opportunities and challenges in developing clean hydrogen in Asia Pacific were the focus of a session at Siemens Energy’s Asia Pacific Energy Week, writes Pamela Largue.

The discussion focused on the all-important issues of reducing the cost, overcoming the steep learning curve, as well as how to spur collaboration to gain a better understanding of policies, applications and potential.

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Dan van Holst Pellekaan, South Australian Minister for Energy and Mining, opened the session with a keynote based on green hydrogen’s rapid emergence across the country and what South Australia is doing to advance this sector, in the midst of “one of the most rapid energy transformations in the world”.

Over the past 15 years, the state’s power mix has changed from mainly coal and gas with less than 1% renewables to currently no coal, and 50% wind and solar backed by gas generation and storage.

According to Pellekaan, South Australia intends to export renewables to the world and green hydrogen is key to this ambition and to becoming APAC’s supplier of choice. Their 2017 roadmap and 2019 action plan are putting the region on track to produce hydrogen at less than $2/kg, by actively supporting local projects and encouraging scale.

South Australia is supporting three large scale projects worth over AUS$40 million (US$31 million) in government grants and funding, namely; the HypSA project using the country’s largest electrolyser, H2U, and NEOEN Australia Hydrogen Superhub.

Currently, regulatory frameworks are also helping to build investor confidence and making it easier to grow the market. For example, last month, in response to calls from industry, the state gazetted that hydrogen, hydrogen compounds and biproducts are to be identified as regulated substances in gas transmission pipelines.

Minister Pellekaan suggested that it’s vital to identify and overcome barriers to investment, such as a lack of key information required to confidently invest in the supply chain.

The government recently completed a pre-feasibility study and produced an online modeling tool and prospectus, elaborating on export-focused projects, technical specs and commercial modeling.

Says Pellekaan: “We are open for business and I encourage like minded companies and governments to reach out and explore how we can work together to advance green hydrogen”.

Poll: How long will it take to see hydrogen as a standard part of life in Asia?

Poll results courtesy Siemens Energy

Prof Armin Schnettler, EVP New Energy Business, Siemens Energy AG shifted away from Australia and elaborated on the APAC region as a whole.

In order to produce green hydrogen, a large amount of renewables is required, explained Prof. Schnettler. The Levelised Cost of Hydrogen (LCOH) depends on the electricity price, on the operational hours of the infrastructure and on the infrasturtcure costs and therefore will differ between countries, projects and how much renewable energy is available.

In Australia, says Schnettler, the focus is on generating the maximum amount of clean, green power. Whereas, in Singapore, the current focus is on developing the innovation in respect to the different applications such as in mobility or refinery, where there is a willingness to pay a higher cost for hydrogen.

Ultimately, the plan in APAC is to decrease the cost of hydrogen to below $2/kg. However, it all depends on the price willingness of the offtaker.

Says Schnettler: “New offtakers include mobility, aviation and the car industry in terms of synthetic fuels, especially where the cost of fuel is less of a concern. There [is potential] in the steel industry too, depending on the cost impact from the use of hydrogen.”

Schnettler emphasises that scalability is also the focus, as pilot projects have proven the technology. “Now we must ramp up production of the infrastructure for large scale applications.”

Poll: What will be the most important driver of hydrogen economy?

Poll results courtesy Siemens Energy

Siah Keng Boon, Head of Advanced Engineering & Technology, Sembcorp Industries delved into Singapore’s market and the need to develop hydrogen due to the limited space for renewables.

Keng Boon explained that in the Singapore context, Trade and Industry Minister Chan Chun Sing has spoken at length about transforming the energy supply with decarbonisation as a key motivator. Hydrogen is the most natural candidate and collaboration is needed to develop key technologies and bring them to the rest of the world.

According to Keng Boon, an agreement was signed last year between Sembcorp and a number of Japanese companies to promote collaboration on hydrogen initiatives and stimulate sector growth.

To further promote hydrogen, Singpower has done a study to create a development roadmap. The results of that study will be announced by next quarter.

When asked what the number one hurdle to hydrogen adoption in business operations is, Keng Boon didn’t hesitate to say cost. However, this hurdle can be overcome. “Together with local government, certain policies must be tweaked to encourage green hydrogen viability, not necessarily through carbon tax, but through using H2 certificates.

Keng Boon also suggests Singapore must start with the low hanging fruit, such as mobility, as an application platform.

HyunSeok Yoo, Chief of Hà¢â€šâ€š Technology, R&D Division, Korea Gas Corporation Research Institute talked about South Korea’s efforts to promote the green hydrogen economy.

In September 2018 the Korean government announced their roadmap to drive decarbonisation and revitalise the hydrogen economy through public and private participation. It was after this announcement that many large corporations in Korea got behind hydrogen.

Korea created a regulatory framework based on technology trends, market requirements and best practices from other countries. Currently renewable energy generation is incentivized and the government is considering introducing a hydrogen portfolio standard (HPS), a regulatory mandate similar to the RPS or renewable portfolio standard.

Yoo highlighted that in order to drive the hydrogen market in Korea, megawatt-class electrolysis projects have been implemented. Korean majors such as Hyundai are also promoting the development of megawatt-class PEM electrolyser technology and several national projects are in play to demonstrate the generation and storage of green hydrogen.

Based on the discussion, it is clear that the APAC region is socially and economically diverse presenting various opportunities in and challenges to developing hydrogen. One of the key overarching issues, however, is cost, and countries will need to focus on scaling up the technology to ensure this clean energy phenomenon becomes the rule rather than the exception.

Sessions are available on demand.

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